- Financial results positively impacted by record throughput,
increased production of higher value ore, improved recoveries, and
improved metal pricing
TORONTO, Feb. 15, 2018 /PRNewswire/ - Sierra
Metals Inc. (TSX:SMT, BVL:SMT) ("Sierra Metals" or the
"Company") announces the filing of Sociedad Minera Corona S.A.'s
("Corona") audited Financial Statements and the Management
Discussion and Analysis ("MD&A") for the fourth quarter of 2017
("Q4 2017").
The Company holds an 81.8% interest in Corona. All amounts are
presented in US dollars unless otherwise stated, and have not been
adjusted for the 18.2% non-controlling interest.
Corona's Highlights for the Three Months Ended December 31, 2017
- Revenues of US$38.2 million vs.
US$31.8 million in Q4 2016
- Adjusted EBITDA of US$17.5
million vs. US$14.9 million in
Q4 2016
- Total tonnes processed of 266,222 vs. 236,650 in Q4 2016
- Net production revenue per tonne of ore milled increased by 6%
to US$141.10
- Cash cost per zinc equivalent payable pound higher by 33% to
US$0.57
- All in sustaining cost ("AISC") per zinc equivalent payable
pound higher by 22% to US$0.90
- Zinc equivalent production of 35.8 million pounds vs. 36.8
million pounds in Q4 2016
- $19.9 million of cash and cash
equivalents as at December 31,
2017
- $27.8 million of working capital
as at December 31, 2017
Sierra Metals has successfully focused on increasing the
production of higher value ore and improving recoveries at the
Yauricocha Mine and has also benefited from improvements to metal
prices resulting in significant increases in revenue and adjusted
EBITDA. The Company's continued emphasis at Yauricocha will be to
focus on the production of higher value ore, improving recoveries,
cost reductions where possible, and improving the Company's
production through optimization programs which will directly
improve operating margins and cash flow generation.
"The Yauricocha Mine had a strong performance in Q4 2017 with
continuing operational and exploration successes" stated
Igor Gonzales, President, and CEO of
Sierra Metals. "With the consecutive quarterly increase in
revenues, adjusted EBITDA, and operating cash flows compared to Q4
2016, we continue to reap the benefits of the operational
improvements program completed at Yauricocha. Furthermore, a 6%
increase in the net production revenue per tonne of ore milled to
US$141.10 continues to demonstrate
that the capital investments were well spent."
He concluded "With a continued emphasis on processing higher
value ore, which in turn has positively impacted operating margins
and cash flow, Corona continues to have a solid balance sheet and
strong liquidity. Management remains very optimistic about
continued operational efficiencies and future operational and
resource growth at Yauricocha."
The following table displays selected audited financial
information for the three months and year ended December 31, 2017:
|
|
|
|
|
|
|
|
(In thousands of
US dollars, except cash cost and revenue
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
per tonne
metrics)
|
December 31,
2017
|
December 31,
2016
|
Var
%
|
December 31,
2017
|
December 31,
2016
|
Var
%
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
38,227
|
31,849
|
20%
|
154,153
|
97,290
|
58%
|
Adjusted EBITDA
(1)
|
|
17,534
|
14,905
|
18%
|
75,779
|
34,991
|
117%
|
Cash Flow from
operations
|
|
18,022
|
14,830
|
22%
|
76,269
|
25,124
|
204%
|
Gross
profit
|
|
18,357
|
13,765
|
33%
|
73,828
|
35,773
|
106%
|
Income Tax
Expense
|
|
(5,717)
|
(4,302)
|
33%
|
(20,682)
|
(8,550)
|
142%
|
Net Income
|
|
10,624
|
8,009
|
33%
|
41,621
|
17,234
|
142%
|
|
|
|
|
|
|
|
|
Net production
revenue per tonne of ore milled (2)
|
|
141.10
|
132.66
|
6%
|
149.63
|
107.95
|
39%
|
Cash cost per tonne
of ore milled (2)
|
|
64.90
|
56.15
|
16%
|
62.42
|
55.78
|
12%
|
|
|
|
|
|
|
|
|
Cash cost per zinc
equivalent payable pound (2)
|
|
0.57
|
0.43
|
33%
|
0.50
|
0.42
|
19%
|
All-In Sustaining
Cost per zinc equivalent payable pound (2)
|
$
|
0.90
|
0.74
|
22%
|
0.78
|
0.71
|
11%
|
|
|
|
|
|
|
|
|
(In thousands of
US dollars, unless otherwise stated)
|
December 31,
2017
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
19,908
|
36,877
|
|
|
|
|
Assets
|
|
140,414
|
128,769
|
|
|
|
|
Liabilities
|
|
50,844
|
62,254
|
|
|
|
|
Equity
|
|
89,570
|
66,515
|
|
|
|
|
|
|
|
|
|
1
Adjusted EBITDA includes adjustments for depletion and
depreciation, interest expense and other financing costs, interest
income, share-based compensation, Foreign Exchange (gain) loss and
income taxes; see non-IFRS Performance Measures section of the
Company's MD&A.
|
2
All-In Sustaining Cost per zinc equivalent pound sold are
non-IFRS performance measures and include cost of sales, treatment
and refining charges, sustaining capital expenditures, general and
administrative expense, and selling expense, and exclude workers'
profit sharing, depreciation, and other non-cash provisions; Cash
cost zinc equivalent pound sold, net production revenue per tonne
of ore milled, and cash cost per tonne of ore milled are non-IFRS
performance measures; see non-IFRS Performance Measures section of
the Company's MD&A.
|
Corona's Financial Highlights for the Three Months and Year
Ended December 31, 2017
- Revenues of $38.2 million for Q4
2017 compared to $31.8 million in Q4
2016 and revenues of $154.2 million
for the year ended December 31, 2017,
compared to $97.3 million for the
same period in 2016. The increase in revenues for Q4 2017 compared
to Q4 2016 was due to a 12% increase in tonnes processed, higher
head grades for copper and zinc, and higher recoveries for silver
and copper. Increases in the prices of copper (32%), zinc (25%),
lead (27%), and gold (6%) also contributed to the revenue
improvement. The 58% increase in revenues for the year ended
December 31, 2017, compared to the
same period in 2016 was due to a 14% increase in tonnes processed,
higher head grades for copper and zinc, higher recoveries for all
metals, except gold, and an increase in the prices of all metals,
except silver.
- Cash cost per zinc equivalent pound sold at the Yauricocha Mine
of $0.57 for Q4 2017 compared to
$0.43 for Q4 2016 and $0.50 for the year ended December 31, 2017, compared to $0.42 for the same period in 2016. All-in
sustaining cost ("AISC") per zinc equivalent pound sold of
$0.90 for Q4 2017 compared to
$0.74 for Q4 2016 and $0.78 for the year ended December 31, 2017, compared to $0.71 for the same period in 2016. The increase
in the AISC per zinc equivalent payable pound for Q4 2017 and the
year ended December 31, 2017,
compared to the same periods in 2016 were a result of increased
sustaining capital expenditures. These included a substantial
amount of infill drilling, ventilation improvements, equipment
purchases, as well as plant improvements that were completed. The
increase was also a result of temporary increases to the mining
costs partially due to timing; as well as slight increases
including infill drilling and drift development costs that will be
utilized within one year, and thus are included in opex.
- Adjusted EBITDA of $17.5 million
for Q4 2017 compared to $14.9 million
for Q4 2016 and $75.8 million for the
year ended December 31, 2017,
compared to $35.0 million for the
same period in 2016. The increase in adjusted EBITDA for Q4 2017
and the year ended December 31, 2017,
compared to the same periods in 2016, was due to the increase in
revenues discussed previously.
- Operating cash flows before movements in working capital of
$18.0 million for Q4 2017, compared
to US$14.8 million for Q4 2016, and
$76.3 million for the year ended
December 31, 2017, compared to
$25.1 million for the same period in
2016. The increase in operating cash flows before movements in
working capital for Q4 2017 and the year ended December 31, 2017, compared to the same periods
in 2016 was primarily due to the increase in revenues, discussed
previously.
- Cash and cash equivalents of $19.9
million as at December 31,
2017, compared to $36.9
million as at December 31,
2016. Cash and cash equivalents decreased by $17.0 million which was driven by operating cash
flows of $54.9 million, offset by
capital expenditures of $18.7
million, debt and interest payments of $21.8 million, intercompany loans of $12.9 million, and dividends paid of $18.4 million.
- Net income of $10.6 million, or
$0.30 per share for Q4 2017 compared
to net income of $8.0 million, or
$0.22 per share for Q4 2016. Net
income of $41.6 million, or
$1.16 per share, for the year ended
December 31, 2017, compared to
$17.2 million, or $0.48 per share, for the same period in
2016.
Corona's Operational Highlights for the Three Months and Year
Ended December 31, 2017:
The following table displays the production results for the
three months and year ended December 31,
2017:
|
|
|
Yauricocha
Production
|
3 Months
Ended
|
12 Months
Ended
|
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Tonnes processed
(mt)
|
266,222
|
236,650
|
12%
|
1,023,491
|
897,169
|
14%
|
|
Daily
throughput
|
3,043
|
2,705
|
12%
|
2,924
|
2,563
|
14%
|
|
Silver grade
(g/t)
|
53.57
|
100.37
|
-47%
|
67.13
|
97.69
|
-31%
|
|
Copper
grade
|
0.80%
|
0.51%
|
58%
|
0.79%
|
0.54%
|
48%
|
|
Lead grade
|
1.19%
|
2.18%
|
-45%
|
1.48%
|
2.52%
|
-41%
|
|
Zinc grade
|
3.91%
|
3.63%
|
8%
|
3.74%
|
3.18%
|
18%
|
|
Gold Grade
(g/t)
|
0.55
|
0.59
|
-7%
|
0.54
|
0.64
|
-16%
|
|
Silver
recovery
|
75.13%
|
72.05%
|
4%
|
74.82%
|
65.34%
|
15%
|
|
Copper
recovery
|
78.86%
|
64.75%
|
22%
|
65.45%
|
59.26%
|
10%
|
|
Lead
recovery
|
81.32%
|
81.72%
|
0%
|
83.64%
|
73.07%
|
14%
|
|
Zinc
recovery
|
88.25%
|
88.49%
|
0%
|
89.14%
|
87.18%
|
2%
|
|
Gold
Recovery
|
16.02%
|
20.06%
|
-20%
|
16.30%
|
25.19%
|
-35%
|
Silver ounces
(000's)
|
330
|
550
|
-40%
|
1,653
|
1,841
|
-10%
|
Copper pounds
(000's)
|
3,567
|
1,720
|
107%
|
11,719
|
6,281
|
87%
|
Lead pounds
(000's)
|
5,431
|
9,295
|
-42%
|
27,934
|
36,440
|
-23%
|
Zinc pounds
(000's)
|
19,393
|
16,776
|
16%
|
75,151
|
54,805
|
37%
|
Gold
ounces
|
723
|
908
|
-20%
|
2,894
|
4,664
|
-38%
|
Zinc equivalent
pounds (000's)(1)
|
35,758
|
36,841
|
-3%
|
146,816
|
140,928
|
4%
|
|
(1) Zinc equivalent
pounds for Q4 2017 were calculated using the following realized
prices: $16.77/oz Ag, $3.13/lb Cu, $1.11/lb Pb, $1.45/lb Zn,
$1,282/oz Au. Zinc equivalent pounds for Q4 2016 were calculated
using the following realized prices: $16.82/oz Ag, $2.38/lb Cu,
$0.95/lb Pb, $1.16/lb Zn, $1,210/oz Au. Zinc equivalent pounds for
12M 2017 were calculated using the following realized prices:
$17.14/oz Ag, $2.82/lb Cu, $1.06/lb Pb, $1.32/lb Zn, $1,265/oz Au.
Zinc equivalent pounds for 12M 2016 were calculated using the
following realized prices: $17.08/oz Ag, $2.21/lb Cu, $/0.85lb Pb,
$0.95/lb Zn, $1,254/oz Au.
|
Qualified Persons
All production technical data contained in this news release has
been reviewed and approved by Gordon
Babcock, P.Eng., Chief Operating Officer and a Qualified
Person under National Instrument 43-101 – Standards of Disclosure
for Mineral Projects.
Americo Zuzunaga, MAusIMM CP
(Mining Engineer) and Vice President of Corporate Planning is a
Qualified Person and chartered professional qualifying as a
Competent Person under the Joint Ore Reserves Committee (JORC)
Australasian Code for Reporting of Exploration Results, Mineral
Resources, and Ore Reserves.
Augusto Chung, FAusIMM CP
(Metallurgist) and Consultant to Sierra Metals is a Qualified
Person and chartered professional qualifying as a competent person
on metallurgical processes.
About Sierra Metals
Sierra Metals Inc. is Canadian based growing polymetallic mining
company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Mines in Mexico. The Company remains focused on
increasing production volume and growing mineral resources. Sierra
Metals has recently had several discoveries and still has
additional brownfield exploration opportunities at all three mines
in Peru and Mexico that are within close proximity to the
existing mines. Additionally, the Company has large land packages
at all three mines with several prospective regional targets
providing longer-term exploration upside and mineral resource
growth potential.
The Company's Common Shares trade on the Bolsa de Valores de Lima and the Toronto Stock Exchange
under the symbol "SMT" and the NYSE AMERICAN Exchange under the
symbol "SMTS."
Continue to Follow, Like and Watch our progress:
Web: www.sierrametals.com | Twitter: sierrametals
| Facebook: SierraMetalsInc | LinkedIn: Sierra Metals
Inc
Forward-Looking Statements
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of Canadian and
U.S. securities laws related to the Company (collectively,
"forward-looking information"). Forward-looking information
includes, but is not limited to, statements with respect to the
Company's operations, including anticipated developments in the
Company's operations in future periods, the Company's planned
exploration activities, the adequacy of the Company's financial
resources, and other events or conditions that may occur in the
future. Statements concerning mineral reserve and resource
estimates may also be considered to constitute forward-looking
statements to the extent that they involve estimates of the
mineralization that will be encountered if and when the properties
are developed or further developed. These statements relate to
analyses and other information that are based on forecasts of
future results, estimates of amounts not yet determinable and
assumptions of management. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as
"expects", "anticipates", "plans", "projects", "estimates",
"assumes", "intends", "strategy", "goals", "objectives",
"potential" or variations thereof, or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved, or the negative of any of these terms
and similar expressions) are not statements of historical fact and
may be forward-looking information.
Forward-looking information is subject to a variety of risks and
uncertainties, which could cause actual events or results to differ
from those reflected in the forward-looking information, including,
without limitation, risks inherent in the mining industry including
environmental hazards, industrial accidents, unusual or unexpected
geological formations, floods, labour disruptions, explosions,
cave-ins, weather conditions and criminal activity; commodity price
fluctuations; higher operating and/or capital costs; lack of
available infrastructure; the possibility that future exploration,
development or mining results will not be consistent with the
Company's expectations; risks associated with the estimation of
mineral resources and the geology, grade and continuity of mineral
deposits and the inability to replace reserves; fluctuations in the
price of commodities used in the Company's operations; risks
related to foreign operations; changes in laws or policies, foreign
taxation, delays or the inability to obtain necessary governmental
permits; risks relating to outstanding borrowings; issues regarding
title to the Company's properties; risks related to environmental
regulation; litigation risks; risks related to uninsured hazards;
the impact of competition; volatility in the price of the Company's
securities; global financial risks; inability to attract or retain
qualified employees; potential conflicts of interest; risks related
to a controlling group of shareholders; dependence on third
parties; differences in U.S. and Canadian reporting of mineral
reserves and resources; potential dilutive transactions; foreign
currency risks; risks related to business cycles; liquidity risks;
reliance on internal control systems; credit risks, including risks
related to the Company's compliance with covenants with respect to
its BCP Facility; uncertainty of production and cost estimates for
the Yauricocha Mine, the Bolivar Mine and the Cusi Mine; and other
risks identified in the Company's filings with Canadian securities
regulators and the U.S. Securities and Exchange Commission, which
filings are available at www.sedar.com and www.sec.gov,
respectively.
This list is not exhaustive of the factors that may affect any
of the Company's forward-looking information. Forward looking
information includes statements about the future and are inherently
uncertain, and the Company's actual achievements or other future
events or conditions may differ materially from those reflected in
the forward-looking information due to a variety of risks,
uncertainties and other factors. The Company's statements
containing forward-looking information are based on the beliefs,
expectations and opinions of management on the date the statements
are made, and the Company does not assume any obligation to update
forward-looking information if circumstances or management's
beliefs, expectations or opinions should change, other than as
required by applicable law. For the reasons set forth above, one
should not place undue reliance on forward-looking information.
Note Regarding Reserve and Resource Estimates
All reserve and resource estimates reported by the Company are
calculated in accordance with the Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects and the
Canadian Institute of Mining and Metallurgy Classification system.
These standards differ significantly from the requirements of the
SEC. The differences between these standards are discussed in our
SEC filings. Mineral resources which are not mineral reserves do
not have demonstrated economic viability.
SOURCE Sierra Metals Inc.